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Saturday, April 10, 2010

Superstars: they’re great; you wish you had more. Their KPI’s are at the top of the charts. You’d clone them if you could. Superstars make you look good to your boss. You fear losing any one of them. They almost always “max out” on your incentive programs. Despite this good news, a poorly designed incentive program will create a very negative effect on your non-superstars that will cost you dearly.

Superstars, Tiger Woods and contact centers.

A very interesting article appeared in The Wall Street Journal on April 3, 2010 titled “The Superstar Effect” written by Jonah Lehrer. The sub-title was “From the playing field to the boardroom, when one competitor is clearly the best, the others don't step up their game—they give up. As Tiger Woods returns to golf, Jonah Lehrer looks at the nature of competition.” The article closely examines the research conducted by Professor Jennifer Brown of the Kellogg School of Management at Northwestern University (these articles can be easily found on the internet). Her research showed that when Tiger Woods is competing, every other golfer took an average of 0.8 more strokes for the tournament. Professor Brown calls this “the superstar effect.” An avid golfer calls it “choking,” and a non-superstar contact center agent operating under a poorly designed incentive program calls this the “why bother to compete for the incentives because the same people always win” effect. Yes, seeing a strong competitor has a negative effect if your chances of winning are slim and the number of prizes is limited. Failure becomes a self fulfilling prophecy. Professor Brown concludes “Just look at golf: Not only does the tournament winner get a disproportionate amount of prize money, but he or she also gets all the glory.” Please don’t interpret this to mean that I’m against competition; competition is a great motivational tool. It must, however be used properly and positively.

One third of incentive programs produce negative results

No, I’m not kidding and one of the many reasons is the de-motivating effects of poorly designed incentive programs. In spite of all of the efforts (committee meetings, budgeting, prize selecting, announcing, promoting, monitoring, rewarding, etc.), only one third produce positive results. The remaining one third of incentive programs are not even measured. The good news is that a well designed incentive program can easily produce an improvement in KPI’s of 20% to 40% very quickly and without breaking the bank.

How to prevent self-fulfilling failure.

There are five basic principles behind a successful and well designed incentive program:

Reward small behaviors as the happen, frequently

Reward anyone meeting a goal, not just the very top performers

Make winning fun and exciting

Pay rewards immediately

Provide choice of rewards

Self-fulfilling failure is a result of a violation of both elements of the first principle. When the non-superstar agents see an incentive program with little chance for their success, they will not try to compete. Sure, they may say that they’re competing just as the other golfers claim to be on their “A game” but the reality of the situation is that the lack of effort is often subconsciously controlled rather than overtly. Golf tournaments can have only one winner but that’s not the case with contact centers incentive programs. Rewarding small behaviors is often called “rewarding the daily homework” and translates to breaking-down large activities into their smallest components and rewarding them as they occur. Don’t wait until the end of the incentive program or even the end of the week or end of the day to reward activities that contribute to your bottom line. This also means having a budget that allows for rewarding everyone who meets your goals. Oh, and yes, your superstars will also be well rewarded. In their case, I quote golfer Gary Player who (attributed originally to Samuel Goldwyn) said “The harder I work, the luckier I get.” The great news is that this quotation can apply to all agents with a well designed incentive program.